Fitch Rates Gazprombank's Upcoming Series 17 Notes 'BBB-(EXP)'

Fri Jun 27, 2014 11:19am EDT

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(The following statement was released by the rating agency) MOSCOW/LONDON, June 27 (Fitch) Fitch Ratings has assigned Gazprombank's (GPB) forthcoming Series 17 senior unsecured loan participation notes (LPN) an expected Long-term foreign currency rating of 'BBB-(EXP)'. The LPNs will be issued by an Ireland-based special purpose entity GPB Eurobond Finance plc, which will on-lend the proceeds to GPB. Obligations under this loan will rank pari passu with the bank's other senior unsecured obligations, which are subordinated to all retail deposits (about 10% of GPB's liabilities at end-May 2014) according to Russian banking law. The expected issue amount is EUR1bn. The LPNs will carry a fixed coupon of 4.00% payable annually and mature 1 July 2019. KEY RATING DRIVERS The expected senior unsecured debt rating is aligned with GPB's Long-term IDRs (BBB-/Negative), which reflect Fitch's view of a high probability of the bank receiving support, if needed, from the Russian Federation (BBB/Negative) or state-controlled entities, most notably OAO Gazprom (BBB/Negative), the bank's founder and significant shareholder. RATING SENSITIVITIES The issue's ratings and GPB's IDRs could be downgraded in case of a significant reduction in the bank's quasi-sovereign ownership, and/or weakening of the close links between the bank and the Russian authorities. Any negative action on the Russian sovereign rating would likely also be matched by a negative action on the bank's ratings and the issue's rating. Gazprombank's ratings are unaffected and as follows: Long-term foreign currency IDR: 'BBB-'; Outlook Negative Long-term local currency IDR: 'BBB-'; Outlook Negative Short-term foreign currency IDR: 'F3' National Long-term rating: 'AA+(rus)'; Outlook Negative Viability Rating: 'bb' Support Rating: '2' Support Rating Floor: 'BBB-' Senior unsecured debt long-term local currency rating: 'BBB-' National long-term debt rating: 'AA+(rus)' GPB Eurobond Finance plc's debt ratings are unaffected and as follows: Senior unsecured debt long-term foreign currency rating: 'BBB-' Senior unsecured debt long-term local currency rating: 'BBB-' 'Old-style' subordinated debt rating: 'BB+' 'New-style' subordinated debt rating: 'BB-' Contact: Primary Analyst Alexander Danilov Senior Director +7 495 956 2408 Fitch Ratings CIS Limited 26 Valovaya Street Moscow 115054 Secondary Analyst Roman Kornev Director +7 495 956 7016 Committee Chairperson James Watson Managing Director +7 495 956 6657 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: Elaine.Bailey@fitchratings.com; Julia Belskaya von Tell, Moscow, Tel: +7 495 956 9908, Email: julia.belskayavontell@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, 'Global Financial Institutions Rating Criteria', dated 31 January 2014, are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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